SHREE RAJPUT SABHA,JAIPUR vs. CIT(EXEMPTION), JAIPUR

3. On the facts and in the circumstances of the case the Ld. CIT has grossly erred in observing that surplus of income over expenditure ranges from 64.2% to 76.3% of receipts in F.Y. 2014-15 to F.Y. 2016-17 and consequently based on these mistaken facts further erred in observing that assessee’s operation is far from no-profit no loss situation. 3.1 On the facts and in the 'circumstances of the case the Ld. CIT has erred in mistakenly arriving at the figure of total receipts as Rs 2,21,37,693 for F.Y. 2015-16 whereas it is total of the gross income of under the various heads or various activities and not the total of gross receipts of various activities which comes to Rs 7,96,80,543 making surplus as only 21.1% of total receipts as against 76.03% mistakenly arrived at by Ld. CIT. Similar is the position in other two years. Thus decision of Ld. CIT, being based on mistakenly incorrect facts, deserves to be quashed.

5. That the appellant craves the right to add, delete, amend or abandon the ground of this appeal at the time or before the actual hearing of the case.”

Shree Rajput Sabha Therefore, the applicant is carrying out activities (Coaching) and such coaching activities cannot be termed as charitable activities since these activities are being run on commercial lines and also do not qualify as "education" as contemplated under the head "education" in Sec. 2(15), which defines charitable purpose. To drive home Hon’ble Supreme Court's in the case of in Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC), all kinds of acquiring knowledge will not come within the meaning of "education as appearing in Sec. 2(15). What "education" Connotes is systematic instruction by way of normal schooling. Therefore, he held that there should be a systematic instruction to the students by way of normal schooling. Mere training activities may provide some kind of knowledge to the students. But that kind of acquisition of knowledge through training courses cannot fall within the meaning of "education" as provided in section 2(15) of the Act. Based on that judgment other judgment he stated that conducting coaching classes is not a charitable activity. As the primary activity of the assessee is to run tuition classes/coaching centre by charging fee, it cannot be held as a charitable organization within the meaning of section 2(15) of the Income Tax Act, 1961. He also noted that assessee is also deriving income for rental receipts. For FY 2014-15 to 2016-17, such rental receipts are of the order of Rs. 20 Lakhs per annum. Such receipts are through renting out of Hall and Lawn Shree Rajput Sabha (Garden) to various business entities/individuals for the purposes of marriages/parties/exhibition-cum-sale of goods and other such occasions. The assessee is also registered as a marriage garden with the Municipal Authorities. The rental receipts are also purely commercial in nature and are again part of commercial receipts as mentioned in proviso to Sec. 2(15). Deriving such rental income is not a charitable activity. Besides the activity of coaching and rentals, the assessee is also running Hostels, Rest/ Guest Houses. The applicant has claimed that running of hostel by charging fee is a "Charitable activity". The hostel is situated in Jaipur, which has come up as a hub of caching institutes. The hostel is one of such commercial activity which has developed in a big way. The activity is regarded as explicitly Commercial as fees is charged and profit is earned. The applicant has tried to justify the claim by stating that less fee is charged for hostel activity. The charging of lower fees cannot alter the character of the activity. The running of hostel is per se a commercial activity. Furthermore, the impugned coaching activity and deriving rent from exhibitions/parties/marriages is not prescribed in the objects of the society. Therefore, the trust is carrying out activities, which are not in accordance with its objects. Further, Ld. CIT(E) noted that the proviso to Section 2(15) makes it clear that if the assessee is engaged in charitable activities under General Public Utility (GPU) then it has to comply with the provisos mentioned in Section Shree Rajput Sabha 2(15) of the Income-tax Act. The proviso to Section 2(15) was inserted to keep a check on the entities who have other objects of GPU and who use object of GPU as a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any services in relation to trade, commerce or business. The above proviso to Section 2(15) is amended by the Finance Act, 2015.w.e.f 01.04.2016. In this amendment, two conditions have been inserted for the case of. GRU-who are engaged in the activity in the nature of trade commerce and business. These are:- (a) Such activities are undertaken in the course of actual carrying out of such advancement of any other object of GPU (b) The aggregate receipts from such activity or activities during the previous year do not exceed 20% of the total receipt of the trust or institution undertaking such activity or activities of that previous year. In nutshell, the meaning of the above proviso is that while deciding the case where business activities are visible, the predominant object test is to be applied and also the Business activities should be in the course of actual carrying out of such GPU activities i.e. such business activities should only be incidental to the charitable object and hence should not be the pre-dominant or primary activity by itself. After these amendments, the concept of business feeding charity has almost lost its significance. The main factor to be seen is the predominant activity undertaken by the applicant. In the case of the Shree Rajput Sabha applicant, the predominant activity test totally goes against it, as it has carried out activities of running of hostel, coaching centre and exhibition centre/marriage garden. As the predominant activity of the applicant is business, it cannot be treated as charitable institution. Based on these observations he hold that the activities of the applicant society are not charitable in nature as it is predominantly carrying out business on commercial basis. The applicant society cannot be held as charitable within the meaning of Sec. 2(15) of the Income-tax Act, 1961. Further, the activities of the applicant are also not as per its objects. Therefore, the provisions of Section 12AA(3) are attracted. In view of these provisions registration granted vide Unique Registration No. (URN) CIT(E)/Recovery/Sec.12AA/41/96- 97/545 dated 25-05-1999 was cancelled.

Aggrieved from above order of ld. CIT(E) the present appeal is filed 4. by the assessee against the said order of the ld. CIT(E) before this tribunal on the grounds as reiterated in para 2 above. To support the various grounds raised ld. AR of the assessee filed a detailed written submission which reads as follows:-

“May it please your honours, At the outset, it is submitted that a written submission in the case was filed before Hon’ble bench earlier wherein certain typographical mistakes have occurred inadvertently. It is therefore requested that submission filed earlier may be treated as Theassessee is a Trustestablished on 28.01.1940 (Copy of Vidhaan at APB 1-3), with two objects, namely: (i)jkt HkfDrvkSj (ii)jktiwr tkfr dk fgr vkSj mUufr djuk.Assessee was initially registered under Jaipur Public Societies Act, 1939, which was subsequently registered under Rajasthan Societies Registration Act 1958 on 08.10.1971(APB 11).Assessee was granted approval under section 12A(a) of the Income Tax Act, 1961 on 25.05.1999 w.e.f. 12.07.1996 by worthy Commissioner of Income Tax (CIT Exemption) vide order No. CIT/Recovery/12AA/41/96-97/545 (APB 12).Vidhaan of assessee was revised on 11.04.1993 in General meeting for 1993, whereby objects clause of assessee were inter alia revised. Revised Objects of Trust read as under:

/kkjk 3 mnns~’; %& 1- jktiwr tkfr ds fgr ,oa m=fr ds dk;ZdjukA 2- jktiwr f’k{kk laLFkku }kjk lapkfyr laLFkkvksa es ai<+us oky sckydks adk 'kkjhfjd] ekufld ,oa ckSf)d fodkl djds mudks Hkkjr ds lq;ksX; ukxfjd cukukA 3- jktiwr laLd`fr] 'kkS;Z] ohjrk] cfynku] R;kx vkSj vuq’kklu dh Hkkoukdks txkus vkSj Kku] foKku] rduhdh f’k{kk vkSj izf’k{k.k nsus okyh f’k{k.k laLFkkvksa dh LFkkiuk djuk ,oa jktiwr Nk=ksa ds fy;s lqfo/kkiw.kZ Nk=kokl dk;e djukA 4- jktiwr lekt esa izpfyr jhfr;ksa vkSj uhfr;ksa ,oa ekU;rkvks aes aLoLFk cnyko ykus ,oa jktiwrlekt ds lkewfgd vkSj O;fDrxr vkfFkZd fodkl dks lgh fn’kk nsus dk iz;kl djuk rFkk jktiwr lekt ds ykHk gsrq leku fopkj /kkjk j[kus okyh laLFkkvksa dks lg;ksx nsukA 5- lekt ds es?kkoh Nk=ksa vkSj vkfFkZd :Ik ls detksj fo|kfFkZ;ksa dks Nk=o`fr nsuk rFkk vlgk; efgykvksa dks vkfFkZd lg;ksx nsukA 6- Jh jktiwr lHkk laLFkk dh leLrpy o vpy lEifÙk;ksa dh VªLVh gksxh ,oa jktiwr lekt dh leLr lkoZtfud vkSj ,sfrgkfld LFky vkSj vpy LkEifÙk;ksa dh laj{kd gksxhA So far as the activities actually carried out by Trust are concerned, assessee is primarily providing financial assistance in the form of scholarships to needy students, students from weaker sections of society, to widows etc. Apart from this assessee is running one institute namely SMS Institute, which is providing career counselling and training for personality development to students at very nominal fee. Besides, girls hostels and Guest house are being run by assessee, for which minimal rent/ fees is charged to meet out the daily cost.Ld. CIT(E) (Exemption) vide its initial show cause notice dated 28/11/2018(APB 13-14)was of view that objects of assessee were meant only for Rajput Caste, which attracted the violation in terms of section 13(1)(b) and sought an explanation as to why should not registration be cancelled. In response to show cause, assessee furnished detailed reply dated 15.12.2018 (APB 15-17), Shree Rajput Sabha whereby detailed explanation was submitted on the issues raised and complete details of charitable activities carried out by the appellant society were alsofiled. Again show cause notice dated 9.10.2020 was issued to assessee, in response to which assessee furnished requisite details on 27.10.2020. Ld. CIT(E) passed order dated 29.10.2020 wherein he was satisfied with explanation of assessee that it was not hit by the provisions of section 13(1)(b), howeverLd. CIT(E) was of the view that assessee was carrying outactivities on commercial basis, which were not charitable in nature, and order of even date was passed cancelling registration of the assessee trust u/s 12AA(3) & 12AA(4) r.w.s.293Cof the Income Tax Act. Aggrieved of the order so passed, assessee has preferred present appeal.

With this background, ground-wise submission is made for your kind and sympathetic consideration:

Ground of Appeal No.1 to 4: In these grounds of appeal, assessee has challenged the action of Ld. CIT(E) in cancelling the registration of assessee trust u/s 12AA(3) & 12AA(4) r.w.s. 293C of the Income Tax Act, by not appreciating that none of the conditions mentioned in those sections areattracted to the case of the appellant and activities undertaken by appellant are absolutely in accordance with and incidental to the objects of the Society. Assessee further challenged the action of Ld. CIT(E) in observing that assessee is carrying its activities on commercial lines and not on charitable basisby observing that surplus of income over expenditure ranges from 64.2% to 76.3% of receipts in F.Y. 2014-15 to 2016-17 and thus concluded that assessee’s operations are commercial in nature and also challenged the observations of the Ld. CIT(E) that surplus of income over expenditure ranges from 64.2% to 76.3% of receipts in F.Y. 2014-15 to 2016-17 and accordingly concluded that assessee’s operation are commercial in nature. Since all the grounds of appeal are interrelated in nature, the same are being dealt with together for the sake of convenience.

At the outset, it is submitted that approval of Trust was withdrawn mainly for following reasons: (i) Assessee was carrying out Coaching Activity(which according to Ld. CIT(E) did not qualify as “education”), deriving Rental Income and was running Hostel, Rest/Guest Houses etc. on commercial lines, which are not charitable activities; (ii) Coaching activity and rental income from exhibitions/marriages was not prescribed in objects of society Shree Rajput Sabha At this juncture, it is submitted that section 12AA lays down the procedure for registration of a trust or charitable institution in order to enable it to claim exemption under section 11 & 12 of the Income Tax Act, 1961. Sub-clause (3) of the said section i.e. section 12AA(3) empowers the Commissioner to cancel the registration of trust/institution in certain specified circumstances.

Kind attention of Hon’ble bench is invited to Provisions of Sub-section (3) of Section 12AA, which read as under: (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution:

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.

It is submitted that, the registration u/s 12AA was granted to assessee trust by the then Ld. CITw.e.f. 25.07.1996 after enquiring, examining and having satisfied that the trust/institution is established for charitable or religious purposes. The ld. Commissioner while granting registration had also objectively examined and satisfied himself as to the fact that the activities of the trust are carried out in accordance with the objects of the trust. Since then the assessee trust had been continuously doing charitable activities which are carried out in accordance with broader objects of the trust. Accordingly, registration of the trust was continued to be granted all through 24 years.

It is only as late as in November, 2018, that the Ld. CIT(E) was of view that trust is working for Rajput Caste and activities of the trust are not charitable and finally cancelled the registration on 2nd issue.

It is submitted that assessee trust having been granted the registration as back as w.e.f. 25.07.1996 and registration of the trust continued to be operational all throughout 24 years, considering the activities carried out by assessee trust are for charitable purposes.The Ld. CIT(E) is vested with power to cancel the registration already granted as provided in Section 12AA(3), wherein certain situations have been As per Sub-section 3 of section 12AA, the only manner in which, Ld. CIT(E) can proceed to cancel the registration is that he has to reach a conclusion after objectively analysing of the entirety of facts, satisfying himself that either (i) the activities of the institution / trust are not genuine or(ii) these are not being carried on in accordance with the objects of the trust / institution. It is only when the Ld. CIT(E) is satisfied after examining the facts and after appreciating the explanation of assessee that either of the condition is satisfied, then he may pass an order cancelling registration.

It may also kindly be noted that, in the entire order there is no whisper that activities of the appellant trust are non-genuine. It is evident that case of assessee trust is not falling in the first condition for cancellation of registration as mentioned in section 12AA(3) which empowers the Ld. CIT(E) to cancel the registration.Assessee trust being thus out of ambit of first condition, one has to see as to whether facts of thecase as have been brought out on record are such that Ld. CIT(E) is satisfied that case of assessee trust fall within 2nd condition i.e. “activities of the trust are not carried out in accordance with objects of trust.”

From Perusal of order of Ld. CIT(E) cancelling the registration, it isevident that in fact there is no observation that activities of the trust are not carried out in accordance with its objects. It is only after discussing legal background of the trust,ld. CIT(E) has extensively discussed about various activities carried out by the trust and the turnover receipt, though mistakenly these were not turnover / receipts but actually were the amounts of residuary income after deducting major direct expenses. Then Ld. CIT(E) has arrived at percentage profit (which is again mistakenly very high) supposedly earned by the trust, and has emphatically discussed this supposedly high profit percentage from various activities in an attempt to make out a case that all these activities are commercial in nature and thus are not charitable in nature. Thus, entire emphasis of Ld. CIT(E) was to establish that due to such high percentage Gross Profit, the activities of the trust are commercial and not charitable. Thereafter, order reads that coaching activity is not Educational in nature and various case laws have been mentioned on the same issue. All these proves that main thrust of Ld. CIT(E)was on trying to provethat activities of Trust are not Charitable in nature.Ld. CIT(E) has not been able to bring out any material on record which establishes that activities of the trust are not carried out in accordance with the object of trust.

It is thus submitted that it is quite evident that ld.CIT has completely failed to prove that activities of assessee are (i) Non genuine or (ii) not in accordance with objects of Shree Rajput Sabha trust and therefore none of the conditions as prescribed under section 12AA(3) as mandatory for cancellation of registration already granted under section 12A are fulfilled in the instant case of assessee trust.Your honour’s would appreciate that provisions of section 12AA are specific in nature and empower the Ld. CIT(E) to withdraw exemption only under specified circumstances and not otherwise. As in the instant case, the Ld. CIT(E)has nowhere been able to point out a single instance where the assessee appellant has undertaken any activity which is non genuine or goes contrary to its objects. On the contrary, assessee with all the supporting documentary evidences, has been able to prove that the activities carried out are very much covered in Object clause of assessee. In such a scenario, cancellation of registration is not in accordance with law and thus registration deserves to be restored. In this regard reliance is placed on the following case laws:

[2017] 392 ITR 240 (Bom)Director of Income Tax (Exemptions) v. Maharashtra housing and Area Development Authority Exemption- Charitable purpose- registration – Cancellation – Assessee a Housing development authority constituted under Act of legislature – No activities demonstrating that assessee not genuine trust – No material indicating that assessee or its affairs not carried out in accordance with the object of trust – Registration cannot be cancelled – Income Tax Act, 1961, ss. 2(15), 12AA CIT Vs. Agricultural Produce and Market Committee [2007] 163 Taxman 359 (Bom.)(Case law APB 88-95) Charitable institution – Profit in activity carried on cannot be the reason to deny registration – S. 12A There is no requirement under the Act that an institution constituted for advancement of any object of general public utility must be registered as a trust to allow registration to said institution even if there is some profit in the activity carried on by the institution. So long as dominate object is of general public utility, it can be said that it is established for charitable purposes.

121 TTJ 685 Guru Gobind Singh Educational Society Vs. CIT (Asr.) Charitable trust – Registration under section 12A – Cancellation under s. 12AA(3) – CIT having produced no material to show that assessee charitable society had turned into profit earning entity or that it has in any manner misutilized its income, was not justified in canceling registration granted under s. 12A by invoking s. 12AA(3) which registration assessee was enjoying for the last number of years without change of facts and circumstances.

Shree Rajput Sabha 52 DTR 225 Dy. Director of IT vs. Shanti Devi Progressive Education Society (Del.) Exemption under S. 10(22) – Educational Institution – Profit motive – In the absence of any finding or allegation that the assessee society running schools has diverted its funds for non-educational activities and anything on record to show existence of profit motive, exemption under s. 10(22) could not be denied on the ground that the assessee was collecting money by way of admission fee, corpus fund and loans from the parents of the students, more so as it is registered under s. 12A and exemption under s. 10(22) has been allowed to if for several years in the past and even in subsequent year.

[2015] 61 taxmann.com 59 (Hyderabad – Trib.) Section 12A – Charitable Trust – Registration of – Business practices: Where assessee’s primary purpose remained advancement of objects of general public utility, even if an incidental or ancillary activity for purpose of achieving main purpose was profitable in nature, denial of registration was unjustified.

150 DTR 249 – Director of IT (Exemptions) Vs. Shree Nashik PanchvatiPanjrapole (Bom) (Case law APB 96-105) CHARITABLE TRUST – REGISTRATION U/S 12A – Cancellation u/s 12AA(3) vis-à-vis applicability of proviso to s. 2(15) – Dominant activity carried out by the assessee trust for over 130 years being to take care of old, sick and disabled cows, an incidental activity of selling milk which may result in receipt of money, by itself would not make it trade, commerce or business nor an activity in the nature of trade, commerce or business to be hit by the proviso to s. 2(15) – Tribunal was therefore justified in holding that the assessee is entitled for continued registration u/s 12A.

164 ITD 212– Rajasthan Cricket Association Vs. Addl. CIT (Jaipur) further approved by the hon’ble Rajasthan High court (APB 1 to 43 and 44-79) Charitable Purpose – Objects of general public utility – Where in case of assessee association registered u/s 12A, predominant activity of assesee was conducting matches of cricket which fell under categeral public utility, mere fact that it earned certain ancillary income in form of TV subsidy, sale of advertisement and surplus of match receipts, would not lead to conclusion that assessee’s case was hit by proviso to section 2(15).

With these factual background, it is submitted that ld. CIT(E) has observed that coaching activity carried on by assessee does not qualify as “Education”. In this regard, it is submitted that basically assessee is running coaching institutes, hostels etc., which are in the nature of career counselling as well as coaching to aspirants of Shree Rajput Sabha various competitive exams and to facilitate learning and to groom their overall personality. Such institute provides scholarship to needy students as well as food and stay facility at their hostel without /nominal charges. Such facilities are provided to students without any bar of caste and creed if the student belongs to poor family background, thus the activities of trust are charitable so far as the same are in the nature of “Relief of the poor”.

At this juncture, definition of Charitable purpose as per section 2(15) is reproduced: (15) "charitable purpose" includes relief of the poor, education, yoga, medical relief, preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest, and the advancement of any other object of general public utility:

Provided that the advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on of any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity, unless— (i) such activity is undertaken in the course of actual carrying out of such advancement of any other object of general public utility; and (ii) the aggregate receipts from such activity or activities during the previous year, do not exceed twenty per cent of the total receipts, of the trust or institution undertaking such activity or activities, of that previous year; From a bare perusal of above definition, it is evident that section does not put any restriction/qualification to the word “Relief of the Poor” so as to limit its scope, which implies thatthe assesse has provided scholarship and other facilities to students belonging to poor family background, who are usually not able to pursue/continue higher education the absence of proper guidance and lack of funds. Your honours would appreciate that the term 'Relief of Poor' has to be understood from a wider perspective. It would be sufficient if the objects are for the benefit of poor people. “Relief of Poor” includes purposes such as Relief to the destitute, orphans or handicapped, disadvantaged women or children in need of aid etc. within its ambit. In the scenario, by providing aid to needy and poor students in the form of concessional fees for coaching/hostel/mess etc., assesse has definitely provided relief to poor.

Shree Rajput Sabha In view of above, it is submitted that coaching activity conducted by assessee being related to “Relief of the poor” by providing them education facilities is covered u/s 2(15) of the Income Tax Act.

Next allegation of ld.CIT is that activities are being run on commercial basis.In this regard it is submitted that as the assessee is providing coaching and other training at subsidized fees and simultaneously providing scholarships to financial/ needy students, the same is very much charitable in nature and is directly covered by main clause “Relief to poor” itself. It is submitted that term 'Relief of the poor'encompasses a wide range of objects for the welfare of the economically and socially disadvantaged or needy. In other words, relief of the poor means providing essential needs to the poor, without charging any fees or by charging a nominal fee. As the assesse has provided Education facilities to poor students, the same is also covered under “Relief of Poor”. In this regard the copies of the forms where such reduction in fee or financial support given to the students are evident, were also submitted before the ld. CIT(E) who failed to appreciate the same (APB- 83-328). Further, so far as girls Hostel and guest house facilities are concerned, girls hostels are being run to provide basic facilities to female students coming from other districts for getting education in Jaipur and were provided concessional facility which is evident from the correspondence, also filed before the ld. CIT(E). Similarly, guest houses are run for stay of persons coming from outside places. Thus, both the activities are in furtherance to main objects and have no separate existence unless main activity of education is being carried out and therefore receipts from such activities are also as per the objects. In this manner, the activity of the assessee i.e., running coaching institute is covered under relief of the poor. In, fact, Ld.CIT has not given any adverse comments regarding contention of the assessee that admission to poor and students from weaker section were given by charging nominal fee without any profit motive and also fees was notcharged on commercial lines.

Kind attention of Hon’ble bench is invited to Revised Objects of assessee as enlisted above, Object clause No. 2 whereof clearly states that Object of Trust would be physical, mental and intellectual development of students studying in institutions run by Rajput ShikshaSansthan. Similarly, Object clause No. 5 states that Trust will provide scholarships to needy and meritorious students of society and financial assistance to helpless and financially challenged women. It is further submitted that no doubt whatsoever has been raised regarding application of such receipts for charitable purpose, such as towards Women Empowerment and Girls education, Intensive Medical Care, Social Activities in Rural Area, Assistance to widows and handicapped persons etc., which fully covered by objects Clause. It is further Shree Rajput Sabha submitted that basically charitable purpose implies application of funds raised in accordance with objects and no doubt has been raised in this regard. Reliance is placed on following case laws:

Hon’ble Jaipur Bench of ITAT, in the case of Rajasthan Cricket Association vs ACIT has observed as under (Case laws PB 44-79): "We have given our thoughtful consideration to the rival submissions of the parties. If volume of receipts and constant increase into surplus is considered, this necessity gives impression of commercial activity. Let us appreciate the facts in light of various judicial pronouncement. The Hon'ble Supreme Court in the case of Commissioner of Sale Tax vs Sai Publication Fund 258 ITR 70(SC) has held:

"There is no dispute that the primary and dominant activity of the trust is to spread the message of Saibaba. This main activity does not amount to "business", The activity of publishing and selling literature, books and other literature is obviously incidental or ancillary to the main activity of spreading the message of Saibaba and not to any business as such even without a profit motive and it is in a way a means to achieve the object of the trust though which the message of Saibaba is spread. It is clear from the trust deed and objects contained therein that in was not established with an intention of carrying on the business/occupation of selling or supplying goods. This being the position, it cannot be said that the trust carries on the business of selling and supplying goods so as to fall within the meaning of ,dealerunder section,2(SA)of the Act. No doubts, the definition of "business" given in section 2(SA) of the Act even without profit motive is wide enough to include any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture and any transaction in connection with or incidental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to "business" unless an independent intention to carryon "business" in the incidental or ancillary activity is established. In such cases, the onus of proof of an independent intention to carry on "business" connected with or incidental or ancillary sales will rest on the department. Thus, if the main activity of a person is not trade, commerce, etc., ordinarily incidental or ancillary activity may not come within the meaning of "business". To put if differently, the inclusion of incidental or ancillary activity in the definition of "business" pre-supposes the existence of trade, commerce, etc."

In the light of the above judgment it can be safely inferred that if the activity is not independent of main activity of the assessee in that event such ancillary activity would not fall within the term "business".”

[2015] 378 ITR 700 (Kar)Director of Income Tax (Exemption) another vs Karnatka Badminton Association (Case laws PB) Charitable purpose-Charitable Trust – Registration – Cancellation – Condition precedent – No Finding about violation – No finding about violation of conditions in Section 12AA(3) – Receipts from commercial activities greater than overall receipts – Cancellation of registration in view of First proviso to section 2(15) – Not a ground specified in statute for cancellation of registration — Income Tax Act, 1961, ss. 2(15), first proviso, 12AA(3)

CIT vs Jodhpur Development Authority 287 CTR 473 (Raj.)/ 139 DTR 1 Charitable trust - Registration under s. 12A - Charitable purpose of planning and development of city vis-a-vis earning of profit - Predominant object of the JDA being to secure the integrated development of the region which undoubtedly falls within the expression ‘advancement of any other objects of general public utility’ within the definition of s. 2(15) and therefore, on account of profit being earned by it through some of the activities undertaken by it, which are ancillary or incidental to the main object of general public utility, it does not cease to be charitable in character so as to render it ineligible to claim registration under s. 12A r/w s. 12AA - Order passed by the Tribunal holding the JDA entitled for registration under s. 12A r/w s. 12AA does not suffer from any infirmity or illegality - For similar reasons, order passed by the Tribunal, holding the UIT, Sriganganagar entitled for registration under s. 12A r/w s. 12AA also cannot be faulted with.

A perusal of above clarifies that so far as pre dominant object of institution is “charitable”, any incidental activity thereto even if results into profits would be considered as “charitable”.(emphasis supplied)

Now, kind attention of Hon’ble bench is invited to the decisions relied upon by ld.CIT while cancelling the approval. Ld.CIT has placed heavy reliance on decision of Hon’ble Apex Court in the case of Sole Trustee, LokaShikshan Trust v. CIT [1975] 101 ITR 234(SC). It is pertinent to note here that facts in that case were entirely different in the sense that in LokaShikshaSansthan there was only one trustee, who had wide powers of utilisation of Trust funds/ to divert its assets or even divert any funds of trusts to other institutions whose objects are similar to the objects of the trust. Moreover,LokaShikshaSansthana was having “Education” as one of the objects, however was actually engaged in business of printing and publishing of newspaper & journals & making huge profits. These activities even are not remotely related to education, whereas in the instance case of assessee trust, the education facilities Ld. CIT(E) has also placed reliance on Gurship Education Trust [2011] TIOL 635 ITAT MUM, wherein assessee was conducting training (held as coaching)classes for cadets desirous to join merchant navy, duration of which was merely 2-3 days, which again could not be termed as systematic education. Your honours would appreciate that this type of training which is only for 2-3 days has been held to be not falling within the purview of Education. However, facts of the present case are quite different as assessee is providing scholarship, hostel facilities etc. to needy students, which is in the nature of “Relief of the poor”. Hence ratio of this cited case will not apply in instant case of assessee.Similarly, Ld.CIT has also relied upon certain other decisions, which are factually different on some or the other footing and therefore not applicable to assessee’s case.

Further the ld. CIT(E) wrongly observed in page 12 of the order that surplus of income over expenditure ranges from 64.2% to 76.3% of receipts in F.Y. 2014-15 to 2016-17 and thus concluding that assessee’s operation are commercial in nature.

In this regard, at the outset, it is submitted that observations of ld. CIT(E) are contrary to the actual facts of the case. During the course of hearing vide letter dt.11.09.2019, copy enclosed with the submission, the assessee has submitted the bifurcation of Chhatravas (hostel) and SMS institute receipts for FY 2015-16 to 2017-18 based on which the ld.CIT(E) has computed the surplus margin in percentage terms at page 12 of its order. However, while computing the margin the ld.CIT(E) has made a grave error of fact wherein from, pages 7 to 10 of the order he has reproduced the Income & Expenditure accounts of the appellant for the year ended on 31.3.2015,31.3.2016 and 31.3.2017 and by picking income shown therein which incidentally be the net income of each activity carried out, has computed the % of surplus. As submitted above, the income shown in the Income & Expenditure account from SMS institute is net of its expenditure and the ld.CIT(E) has ignored the bifurcation of gross receipts while making calculation which has resulted into such a high percentage of surplus. Before submitting details of actual percentage of surplus based on the gross receipts, it is submitted that while filing Grounds of appeal

, in ground of appeal no.3, some typographical error has occurred, due to which gross receipts and percentage of surplus has been erroneously computed. Actual gross receipts from various activities vis a vis surplus therefrom is computed as under:

1. April 2014 to 31. March 2015 Particulars Amount Particulars Amount 4,40,03,7 Scholarship Expenses 6,98,715.00 Gross Receipts of SMS Institute 25.00 77,39,848.40 Legal & Professional 3,62,63,8 1,18,270.00 (-) Expenses of SMS Institute Expenses 76.60 Social Activities in Rural 39,12,37 10,06,103.00 Gross Receipts of Rajput Chhatrawas Area 9.00 39,35,97 Jayanti Expenses 2,25,283.00 (-) Expenses of Rajput Chhatrawas 5.50 -23,596.50 2,67,480. Bank Charges 6,123.55 Gross Receipts of Guest House 00 28,566.0 Intensive Medical Care 61,000.00 (-) Expenses of Guest House 0 2,38,914.00 36,175.0 Women Empowerment & 9,23,536.00 Gross Receipts of Diggi Rest House Girls Edu. 0 68,799.0 Widow & Handicapped 38,500.00 (-) Expenses of Diggi Rest House Persons Assist 0 -32,624.00 Surplus of income over 1,01,45,176.85 Gross Receipts of Jagatpura Hostel 5,960.00 expenditure 1,29,340. (-) Expenses of Jagatpura Hostel 00 -1,23,380.00 6,29,282. Gross Receipts of MGD Girls Hostel 00 6,58,550. (-) Expenses of MGD Girls Hostel 50 -29,268.50 Miscellaneous Income 1,44,847.00 Bank Interest 4,49,390.00 Rent Receipts 33,14,477.00 Interest on Bank FD 10,19,100.00 Donation 5,25,000.00 1,32,51,975.90 1,32,51,975.90

Gross Receipts for FY 2014-15 Particulars Amount SMS Institute 4,40,03,725.00 Guest House 2,67,480.00 Diggi Rest House 36,175.00 Rajput Chhatrawas 39,12,379.00 Jagatpura Hostel 5,960.00 Misellaneous Income 1,44,847.00 Bank Interest 4,49,390.00 Rent Receipts 33,14,477.00 Interest on Bank FD 10,19,100.00 Donation 5,25,000.00 Total Gross Receipts 5,36,78,533.00 Surplus % of total Gross receipts 18.90%

1 April 2015 to 31 March 2016 Particulars Amount Particulars Amount Widow & Handicapped Persons 57,900.00 Gross Receipts of SMS Institute 7,60,68,515.00 Assist 1,56,63,2 Visharamalya Expenses 73,656.00 (-) Expenses of SMS Institute 6,04,05,233.00 82.00 Scholarship Expenses 1,44,300.00 Gross Receipts of Rajput Chhatrawas 45,32,986.00 6,97,737.

Guest House Expenses 1,18,165.00 (-) Expenses of Rajput Chhatrawas 38,35,249.00 00 Election Expenses 1,90,000.00 Gross Receipts of MGD Girls Hostel 23,55,014.00 1,78,353. Social Activities in Rural Area 25,07,405.00 (-) Expenses of MGD Girls Hostel 21,76,661.00 00 Jayanti Expenses 2,34,347.00 Gross Receipts of Jagatpura Hostel 9,056.00 - 96,171.0 Bank Charges 12,404.00 (-) Expenses of Jagatpura Hostel 1,05,227.00 0 3,85,965. Intensive Medical Care 1,46,220.00 Guest House Receipts 00 3,19,231. Women Empowerment & Girls 16,74,521.00 Misellaneous Income Edu. 00 1,68,82,604. 17,053.0 Digg Vishranalya Surplus of income over expenditure 00 0 9,66,725. Bank Interest 00 23,33,23 Rent Receipts 2.00 12,99,87 Interest on Bank FD 0.00 2,54,465. Donation 00 21,780.0 Trivarshik Fees 0 2,20,41,522. 2,20,41,5 00 22.00

Gross Receipts for FY 2015-16 Particulars Amount SMS Institute 7,60,68,515.00 Rajput Chhatrawas 45,32,986.00 Rajput Sabha MGD Girls Hostel 23,55,014.00 Jagatpura Hostel 9,056.00 Guest House Receipts 3,85,965.00 Misellaneous Income 3,19,231.00 Digg Vishranalya 17,053.00 Bank Interest 9,66,725.00 Rent Receipts 23,33,232.00 Interest on Bank FD 12,99,870.00 Donation 2,54,465.00 Trivarshik Fees 21,780.00 Total Gross Receipts 8,85,63,892.00 Surplus % of total Gross receipts 19.06%

1 April 2016 to 31 March 2017 Particulars Amount Particulars Amount 5,87,06,938 Jagatpura Hostel 2,62,989.00 Gross Receipts of SMS Institute .00 4,30,30,321 Election Expenses 1,98,983.00 (-) Expenses of SMS Institute .50 1,56,76,616.50 41,57,474.0 Women Empowerment & Girls 31,03,387.00 Gross Receipts of Rajput Chhatrawas Edu. 0 41,54,766.0 Intensive Medical Care 1,00,618.00 (-) Expenses of Rajput Chhatrawas 0 2,708.00 Jayanti Expenses 5,05,254.00 Gross Receipts of Guest House 3,26,565.00 Scholarship Expenses 2,34,052.00 (-) Expenses of Guest House 1,04,313.00 2,22,252.00 Social Activities in Rural 22,73,170.00 Gross Receipts of DiggiVisharamalya 23,798.00 Area Widow & Handicapped Persons 1,16,900.00 (-) Expenses of DiggiVisharamalya 1,68,836.00 -1,45,038.00 Assist Surplus of income over 1,37,16,074.53 Gross Receipts of MGD Girls Hostel 7,45,304.00 expenditure 14,70,056.5 (-) Expenses of MGD Girls Hostel 5 -7,24,752.55 Misellaneous Income 2,93,611.97 Trivarshik Fees 5,820.00 Bank Interest 6,81,461.00 Rent Receipts 19,16,799.61 Interest on Bank FD 13,41,491.00 Donation 12,40,458.00 2,05,11,427.53 2,05,11,427.53

Gross Receipts for FY 2016-17 Particulars Amount SMS Institute 5,87,06,938.00 Rajput Chhatrawas 41,57,474.00 Guest House 3,26,565.00 DiggiVisharamalya 23,798.00 Rajput Sabha MGD Girls Hostel 7,45,304.00 Misellaneous Income 2,93,611.97 Trivarshik Fees 5,820.00 Bank Interest 6,81,461.00 Rent Receipts 19,16,799.61 Interest on Bank FD 13,41,491.00 Donation 12,40,458.00 Total Gross Receipts 6,94,39,720.58 Surplus % of total Gross receipts 19.75% From the above chart, your honours would appreciate that a bare perusal of Income and Expenditure account reproduced in order of ld. CIT(E), shows that on the credit side of it, “Net income” has been transferred from Coaching and Hostel activities and not the Gross receipts, whereas surplus percentage needs to be computed with reference to Gross Receipts. It is therefore submitted that conclusions drawn by Ld.CIT(E) are based on incorrect facts and deserves to be ignored and excluded and it is submitted that assessee not making hefty surplus as observed by Ld. CIT(E) and more than 80% of the gross receipts are spent towards the objects of the society. In fact, no doubt whatsoever has been raised towards such application of income.Moreover, the charitable nature of appellant society’s objects would not lose its character merely because some gains arise from the activity. It has been notably held by the Courts that it is not possible to carry on any charitable activity in such a Shree Rajput Sabha way that the expenditure exactly balances the income and there is no resultant profit, for, to achieve this, would not only be difficult of practical realization but would reflect unsound principles of management.

Hon’ble Supreme Court in the case of Assistant Commissioner of Income-tax (Exemptions) v. Ahmedabad Urban Development Authority [2022] 143 taxmann.com 278 (SC) has held as under:

I. Section 2(15) , read with sections 11 and 12A , of the Income-tax Act, 1961 - Charitable purpose (Objects of general public utility) - Whether an assessee advancing general public utility cannot engage itself in any trade, commerce or business, or provide service in relation thereto for any consideration - Held, yes - Whether however, in course of achieving object of general public utility, concerned trust, society, or other such organization, can carry on trade, commerce or business or provide services in relation thereto for consideration, provided that (i) activities of trade, commerce or business are connected to achievement of its objects of general public utility and (ii) receipt from such business or commercial activity or service in relation thereto, does not exceed quantified limit i.e. 20 per cent of total receipts of previous year - Held, yes - Whether term 'incidental' in section 11(4A) is to be interpreted in light of sub-clause (i) of proviso to section 2(15), i.e., that activity in nature of business, trade, commerce or service in relation to such activities should be conducted actually in course of achieving GPU object, and income, profit or surplus or gains can then, be logically incidental - Held, yes - Whether thus, so long as a GPU's charity's object involves activities which also generates profits (incidental), it can be granted exemption provided quantitative limit (of not exceeding 20 per cent) under second proviso to section 2(15) for receipts from such profits, is adhered to - Held, yes [Paras 168 and 253] [Partly in favour of assessee] It is thus submitted that surplus, if any generated by assessee was merely incidental to the main object and in no way it can be treated as carrying out activities in the nature of trade, commerce or business. More particularly when it is not the case where the surplus so generated was applied somewhere else which is contrary to the objects of the appellant and all the funds available are since inception were used for the attainment of the objects of the appellant trust.

Shree Rajput Sabha In view of above, it is submitted that activities conducted by assessee are charitable in nature and it is thus requested that registration earlier granted to assessee u/s 12A may please be directed to be restored.”

4.1 To support the contentions raised in the written submission, the ld. AR of the assessee filed the following evidence:-

S No. Particulars Page Nos.

1. Copy of vidhaan of trust 1-3 2. Copy of revised Vidhaan of trust 4-10 3. Copy of certificate of registration under Rajasthan Societies 11 Registration Act, -1958 4. Copy of approval granted to Trust by worthy Commissioner of 12 Income Tax (Exemption) under section 12A(a) vide order No.CIT/Recovery/12AA/41/96- 97/545 5. Show cause notice dated 28.11.2018 issued by CIT(Exemption) 13-14 6. Reply dated 15.12.2018 filed in response to Show Cause notice 15-17 dated 28.11.2018.

7. Show Cause Notice dated 09.10.2020 18-19 8. Reply dated 27.10.2020 filed in response to show cause notice 20-56 dated 09.10.2020 9. Copy of Balance Sheet and Profit & loss account for the year 57-61 ending 31.03.2015 10. Copy of Balance Sheet and Profit & loss account for the year 62-66 ending 31.03.2016 11. Copy of Balance Sheet and Profit & loss account for the year 67-71 ending 31.03.2017 12. Copy of Balance Sheet and Profit & loss account for the year 72-76 ending 31.03.2018 13. Copy of Balance Sheet and Profit & loss account for the year 77-82 ending 31.03.2019 14. Copies of application forms given by students to Rajput Sabha for 83-328 seeking relaxation in admission fees.

4.2 The ld. AR of the assessee to drive home to the contentions so raised has also relied upon the following decisions:-

Shree Rajput Sabha S. No. Particulars Page No.

Shree Rajput Sabha provided educational institution concerned does not exist for purposes of profit, yet educational effects of newspaper or publishing business are only indirect, problematical, and quite incidental so that, without imposing any condition or qualification upon nature of information to be disseminated or material to be published, mere publication of news or views cannot be said to serve a purely or even predominantly educational purpose in its ordinary and usual sense.”

Shree Rajput Sabha CIT(E) called for certain details which was filed and after perusing the details filed the ld. CIT(E) stated that the reply is duly considered but not found tenable in view of the fact that the assessee is running SMS Institute through which it is engaged in the activity of Coaching Institute in the name “Carrier Counseling and Personality Development” since long. Further, the assessee- appellant has also contended that to support the financial help of other objects, the society has started SMS Institute & is charging fee for conducting course/services to meet the cost of education programs. It is claimed that wherever surplus resulted, it was utilized for the promotion of the object of the society and the education programs were conducted infirmity with the objects. This contention is not acceptable and rejected per se because the income derived from the SMS Institute which is engaged in coaching is increasing continuously. Ld. CIT(E) also noted that the surplus ranges from 64.2% to 76.3% of total receipts, which itself makes it evident that the assessee's operation is very far from a no-profit no-loss situation. Secondly, the fact that the applicant provides concession in coaching to a few students does not alter the commercial nature of its operation, since providing concession to few students is very much prevalent in all commercial coaching institutes. As such, the applicant is providing coaching in various segments and at prevailing market rates, which cannot be termed as charitable activity as per the existing law and Shree Rajput Sabha provisions of Income Tax Act. The said coaching activity is evidently a commercial activity. Further, the income from such coaching activities is forming 57.62% for F.Y. 2014-15 (Rs. 77,39,848/-), 70.75% for F.Y. 2015-16 (Rs. 1,56,63,282/-) and 73.32% for F.Y. 2016-17 (Rs. 1,56,76.616/- ), which shows that coaching is the pre-dominant activity of the applicant. Therefore, the applicant is carrying out activities (Coaching) and such coaching activities cannot be termed as charitable activities since these activities are being run on commercial lines and do not qualify as "education" as contemplated under the head "education" in Sec. 2(15), which defines charitable purpose. To drive home Hon’ble Supreme Court's in the case of in Sole Trustee, Loka Shikshana Trust v. CIT [1975] 101 ITR 234 (SC), all kinds of acquiring knowledge will not come within the meaning of "education as appearing in Sec. 2(15). What "education" Connotes is systematic instruction by way of normal schooling. Therefore, he held that there should be systematic instruction to the students by way of normal schooling. Mere training activities may provide some kind of knowledge to the students. But that kind of acquisition of knowledge through training courses cannot fall within the meaning of "education" as provided in section 2(15) of the Act. Based on that judgment he stated that conducting coaching classes is not a charitable activity. As the primary activity of the assessee is to run tuition classes/coaching center by Shree Rajput Sabha charging fee, it cannot be held as a charitable organization within the meaning of section 2(15) of the Income Tax Act, 1961. He also noted that assessee is also deriving income for rental receipts. For FY 2014-15 to 2016-17, such rental receipts are of the order of Rs. 20 Lakhs per annum. Such receipts are through renting out of Hall and Lawn (Garden) to various business entities/individuals for the purposes of marriages/parties/exhibition-cum-sale of goods and other such occasions. The assessee is also registered as a marriage garden with the Municipal Authorities. The rental receipts are also purely commercial in nature and are again part of commercial receipts as mentioned in proviso to Sec. 2(15). Deriving such rental income is not a charitable activity. Besides the activity of coaching and rentals, the assessee is also running Hostels, Rest/ Guest Houses. The applicant has claimed that running of hostel by charging fee is a "Charitable activity". The hostel is situated in Jaipur, which has come up as a hub of caching institutes. The hostel is one of such commercial activity which has developed in a big way. The activity is regarded as explicitly Commercial as fees is charged and profit is earned. The applicant has tried to justify the claim by stating that less fee is charged for hostel activity. The charging of lower fees cannot alter the character of the activity. The running of hostel is per se a commercial activity. Furthermore, the impugned coaching activity and deriving rent from exhibitions/parties/marriages is not prescribed in the objects of the society.

Shree Rajput Sabha Therefore, the trust is carrying out activities, which are not in accordance with its objects. Further, Ld. CIT(E) noted that the proviso to Section 2(15) makes it clear that if the assessee is engaged in charitable activities under General Public Utility (GPU) then it has to comply with the provisos mentioned in Section 2(15) of the Income-tax Act. The proviso to Section 2(15) was inserted to keep a check on the entities who have other objects of GPU and who use object of GPU as a mask or a device to hide the true purpose which is trade, commerce or business or the rendering of any services in relation to trade, commerce or business. The above proviso to Section 2(15) is amended by the Finance Act, 2015.w.e.f 01.04.2016. In this amendment, two conditions have been inserted for the case of. GRU-who are engaged in the activity in the nature of trade commerce and business. These are:- (a) Such activities are undertaken in the course of actual carrying out of such advancement of any other object of GPU (b) The aggregate receipts from such activity or activities during the previous year do not exceed 20% of the total receipt of the trust or institution undertaking such activity or activities of that previous year. In nutshell, the meaning of the above proviso is that while deciding the case where business activities are visible, the predominant object test is to be applied and also the Business activities should be in the course of actual Shree Rajput Sabha carrying out of such GPU activities i.e. such business activities should only be incidental to the charitable object and hence should not be the pre-dominant or primary activity by itself. After these amendments, the concept of business feeding charity has almost lost its significance. The main factor to be seen is the predominant activity undertaken by the applicant. In the case of the applicant, the predominant activity test totally goes against it, as it has carried out activities of running of hostel, coaching center and exhibition center/marriage garden. As the predominant activity of the applicant is business, it cannot be treated as a charitable institution. Based on all these observations, ld. CIT(E) considers that assessee- applicant society’s activities are not charitable in nature as it is predominantly carrying out business on a commercial basis. The applicant society cannot be held as charitable within the meaning of Sec. 2(15) of the Income-tax Act, 1961. Further, the activities of the applicant are also not as per its objects. Therefore, the provisions of Section 12AA(3) were attracted. In view of these provisions registration granted vide Unique Registration No. (URN) CIT(E)/Recovery/Sec.12AA/41/96-97/545 dated 25-05-1999 was cancelled by ld. CIT(E) and against that order the assessee is before this tribunal. The ld. AR of the assessee submitted ld. CIT(E) finding is before the decision of the apex court and is case of AUDA (Supra) wherein the apex court has decided that a charitable organization cannot be engaged in any trade, Shree Rajput Sabha commerce or business, or provide services in relation thereto for any consideration unless such commercial activity is incidental to the main object of GPU and is also within the monetary threshold of up to 20% of its total receipts, as prescribed under section 2 (15) of the IT Act. As is evident that considering the decision of the apex court it is not disputed that activities of the assessee trust are falling under GPU and therefore, the finding of ld. CIT(E) while cancelling the registration was surrounding by the high profit margin on the activities of the trust and therefore, now the short issue that based on the evidence on record the profit margin exceeds 20 % of the receipt or not? On this aspect of the matter we have persuaded the submission made before ld. CIT(E), finding of ld. CIT(E) and submission made in this proceeding. AS is evident that the assessee is registered under Jaipur Public Societies Act, 1939, which was subsequently registered under Rajasthan Societies Registration Act, 1958 on 08.10.1971. From the perusal of documents, we observed that the assessee was granted approval u/s 12A(a) of the Income Tax Act, 1961 on 25.05.1999 w.e.f. 12.07.1996 by the ld. CIT(E). Subsequently, the trust has amended its constitution and objects on 11.04.1993. The ld. AR for the assessee has furnished the registration of the trust erred the approval of exemption u/s 12AA of the trust and the revised objects.

Shree Rajput Sabha As is evident from the order of ld. CIT(E) that the contention raised is activities carried out are in the nature of trade, commerce or business. But on careful perusal of the object and order it is revealed to while arriving at such conclusion the only aspect looked it on the profit that the assessee reported. The assessee contended that surplus generated for the last three year are as per the table given below: Financial year Surplus as % of receipt(Profit) 2014-15 18.90 2015-16 19.06 2016-17 19.75

At the time of hearing of the present appeal the ld. DR did not dispute this calculation of overall margin of the assessee which is below 20 % as fixed by the apex court in the case of AUDA(Supra). Thus, we have gone through the calculation done by ld. CIT(E) in his order and the computation of the overall profit (Surplus) earned by the assessee is to be seen as whole and which is as is evident is below 20 % and therefore, considering the apex court decision in the case of AUDA the registration of the assessee trust cannot be cancelled merely on the ground that the activities of the assessee trust generate a reasonable surplus and the activities of the assessee trust being in the nature of GPU covered under section 2(15) of the Act the action of the ld. CIT(E) in cancelling Shree Rajput Sabha the registration of the trust is without considering the decision of the apex court and therefore, respectfully following the verdict of the apex court we direct the ld. CIT(E) to restore the registration of the assessee trust as per provision of section 12AA of the Act and decide the application of the assessee trust u/s 80G of the Act in accordance with the law as the reasons for the present appeal arise from that application made by the assessee trust. In the result the appeal of the assessee is allowed.

Order pronounced in the open Court on 10/09/2024.